Global Cotton Planting Area Reduces Cotton Prices Or Rises

Event: the US Department of Agriculture recently announced in the 2015 Agricultural Outlook Forum, 2015/16, the United States

The output is expected to be 3 million 50 thousand tons, because the cotton planting area is expected to be reduced by 12%. The latest findings of the China Cotton Association show that Xinjiang's cotton sown area is also expected to drop by 16%, exceeding the market expectations.

The main factor that will affect global cotton supply and demand in 2015/16 will remain China's output, inventory and import policies.

Due to the current situation of China's national cotton reserves (about 11 million tons), it is estimated that domestic cotton prices will not fluctuate significantly in 2015 years, and the global cotton sowing area will decrease significantly, which will bring cotton price rise to a certain extent. Considering that the current cotton price (13000-14000 yuan / ton) is at a historical low level, cotton prices will rise slightly.

The recovery growth of domestic cotton textile industry in 2015 was mainly caused by the reduction of cotton price difference at home and abroad.

In April 2014, the cotton policy was changed from storage to storage and storage to direct subsidy. The links in the industrial chain were consistent. The cotton price would be obviously downward. Careful order and digestion of inventory were basically the same consensus. With the difference between domestic and foreign cotton prices narrowed to a reasonable range (1500-2000 yuan / ton), the demand for replenishment of cotton textile industry is expected to drive the growth of order volume and gross margin so as to benefit the leading enterprises of cotton textile industry.

Performance.

The three factors that affect cotton price fluctuation, supply and demand, policy and capital, have changed in 2015 years: after the cotton policy has been replaced by direct subsidy, the cotton price has dropped by 30% since 2014. After 2011-2013 consecutive years of cotton storage and storage in three consecutive years, the domestic reserve cotton scale is at about 10000000 tons, which is at a historical level. Considering that the cotton demand in China is 6 million 500 thousand tons -750 million tons per year, it is expected that the supply will be significantly larger than demand in 2015.

The decline in cotton prices affects the short-term performance of the enterprise: due to the customer's caution, the wool textile enterprises' gross interest rate will meet certain resistance. The pressure of order quantity and gross interest rate will bring a certain suppression effect on the performance of cotton textile enterprises in the 3 and 4 quarter of 2014 and the performance of the first quarter of 2015.

We are optimistic about the recovery of the cotton textile industry chain in 2015: affected by the domestic cotton cost support, the anticipation policy and the difference between the domestic and foreign cotton prices, which are maintained at a reasonable interval of 1500-2000 yuan / ton, the three major factors, combined with the current cotton price, it is estimated that the domestic cotton price will fluctuate in the low position in 2015, and the area will be 13000-13500 yuan / ton, which is basically relatively stable in the 2005-2008 years.

The demand for centralized replenishment in the lower reaches of the 2015 will drive the recovery of the industrial chain. In addition, according to historical experience, cotton price fluctuations have obvious cyclical effects on the supply and demand of domestic cotton and the inventory size of enterprises. It is estimated that there will be additional procurement with the advent of the historic bottom of cotton prices.

The driving force will further amplify the growth of earnings.

In the medium term, the high cost predicament of cotton textile enterprises since 2010 is expected to begin to reverse in 2015. Since 2010, cotton textile enterprises are facing a rising high cost dilemma. With the beginning of natural growth of human cost, environmental costs and the decline of main raw material cotton prices, cotton textile enterprises are expected to usher in a dilemma reversal in 2015 and enhance their international competitiveness.

And experienced early industry integration, small scale, relatively weak strength of enterprises to withdraw from market competition, industry concentration is expected to enhance overall, orders and other resources to the leading enterprises gathered, is expected to significantly improve the market share of leading textile enterprises.

If cotton planting area decreases significantly in April, cotton price will rise slightly, and it will be further improved.

The gross profit margin of leading enterprises.

It focuses on Huafu color spinning, Baron East, Lutai A, and lufa shares.